Developed Vs Developing countries

1. Developed Vs Developing countries The countries of the world can be looked at in many ways: physically, culturally, socially, and economically. By examining the economic differences among countries, significant variations and variables in wealth, technology, economic activities, land use, natural resources and growth potential can be seen. These differences create two categories of countries, developed and developing. Developing countries are classified as low-income, middle-income, newly-industrialized, and oil-exporting. Developing countries are not homogeneous but are enormously diverse in their structure.

2. . In particular it is stressed that the developing world differs in: • Population and geographic size, Language and religion., Experiences in the colonies. Levels of education, Natural resource endowments, Types of industry. • Role of government and degree of democracy. Degree of dependency in international economic and political affairs. • The developing countries have several common features and problems, despite the differences mentioned above, Six similarities among developing countries are considered, with considerable emphasis being placed on the first two: • Low levels of living., Low levels of productivity. • High population growth and dependency burdens., Dependence on agriculture and primary exports. • The common method of classifying countries is in terms of GNP PC.

3. Common Characteristics of Developing Countries • Low level of living; • Low GNP/ Capita; 3. Income inequality; 4. Problem of poverty; 5.Health problems; 6. Human capital;

4. Rostow’s Stages of Economic Growth • Walter Rostow (1916- 2003)

5. In 1960, the American Economic Historian, W. W. Rostow, suggested that countries passed through five stages of economic development. 5 4 3 2 1

6. Stage 1 – Traditional Society • The economy is dominated by subsistence activity where output is consumed by producers rather than traded. • Any trade is carried out by bartering where goods are exchanged directly for other goods. • Agriculture is the most important industry and production is labor intensive • E.g. nomadic tribe in Papua New Guinea ??

8. Stage 2 – Preconditions for Takeoff • A time to transform a traditional society in the ways necessary for it to exploit the fruits of modern science • E.g. Sudan

9. Stage 3 – Takeoff • Rapid increase in modernization and expansion • Industries lead the way (the stuff makers…) • Increase in literacy and education, health care and life expectancy • E.g. China

11. Stage 4 – Drive To Maturity • The economy diversifies into new areas • Technological innovation provides a diverse range of investment opportunities. • The economy is producing a wide range of goods and services and there is less reliance on imports. • E.g. Russia

12. Stage 5 –Age of High Mass Consumption • Service sector flourishes (restaurants,banks,telecommunication,massage, doctors) • Collection of material goods (“stuff”) • E.g. Canada